Posts tagged with: Cheque

When bank robber Willie Sutton was asked why he robbed banks, he is (mis)quoted as having said, “Because that’s where the money is.” Turns out that is also why there is more street crime in poorer neighborhoods: because that’s where the cash is. Or at least it’s where the case was.

It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods — where street offenses are concentrated — a significant source of circulating cash stemmed from public assistance or welfare payments. But starting in the 1990s that changed, as the Federal government gradually phased out paper welfare checks in favor of electronic debit cards (the Electronic Benefit Transfer [EBT] program).

A number of economists, including Milton Friedman and Thomas Sowell, have written about the power of the market economy to overcome racism and discrimination, to put people into relationships on the basis of economic decision-making rather than skin color. As Friedman contended,

the preserves of discrimination in any society are the areas that are most monopolistic in character, whereas discrimination against groups of particular color or religion is least in those areas where there is the greatest freedom of competition.

But as a conversation I had with some others about the video also illustrates, there are times when (at least in the short run interests of the firm), something like profiling can seem to make some economic sense. The successful passing of one bad check can really hurt a store’s margins. Practically speaking the stores often take a complete loss.(more…)